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’Equity finance in EA flies above needy SMEs’
2006-12-28 09:50:39
By Lydia Shekighenda
Availability of long-term financing remains a critical challenge to the acceleration of economic growth and development in East Africa, the US embassy in Dar es Salaam has said.
A statement issued by the embassy yesterday says that while there is equity finance available for East Africa; it is not specifically designated to small and medium enterprises.
Current equity financing often seeks investments greater than $2 million, which is higher than those of SMEs, and is usually only available from banks that do not provide permanent equity financing, the statement said.
The press release says that SMEs play a pivotal role in Africa’s development by fostering economic growth, spurring innovation, creating employment, and providing inputs for larger enterprises and large public-private partnership infrastructure projects.
”Bringing SMEs into the formal financial sector in East Africa through a venture capital fund would help SMEs to enable implement their long-term strategies and to compete on a global basis,” the statement says.
Meanwhile US Trade and Development Agency (USTDA) has donated $473,050 to support the creation of a venture capital fund in East Africa to enable small and medium enterprises to serve as a catalyst for economic growth.
The grant awarded recently in Kampala to the East African Development Bank (EADB), will be used to partially fund a determination of requirements associated with the establishment of such a fund in Kenya, Uganda and Tanzania.
The grant was conferred during a signing ceremony at the U.S. Embassy in Kampala, Uganda between US Ambassador to Uganda, Steven A. Browning and Godfrey Tumusiime, Director General of EADB who signed the grant agreement on behalf of the U.S. government and EADB, respectively.
The EADB has selected Structured Credit International Corporation, a New York-based financial advisory firm, to provide the technical assistance.
In addition to the USTDA grant, the EADB will contribute additional resources toward the completion of the technical assistance program.
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